Increased competition from global carmakers and management missteps have led Tesla, once one of the world’s more expensive electric vehicle makers, to introduce new price cuts across its lineup of products.
The EV company, arguably the brands most closely tied to coastal, upper middle class wealth, reduced prices on a wide variety of its models in the U.S. and Europe, with some slashed by up to 20%. Model 3 and Model Y prices in Germany were reduced by between 1% to 17% depending on specific configuration while the price of a new Model 3 in the U.S. could drop between 6% and 14%, CNBC notes. Stateside, Model Y Teslas could reportedly see price cuts up to 19%. All of those price reductions come around a week after the company opted to slash listings in China between 6% and 13.5%, a move which managed to piss off a fair share of Chinese owners kicking themselves for missing out on the deal.
At least part of the reason for the markdowns in the U.S, CNBC and Reuters note, were likely to help Tesla’s qualify for new federal EV tax credits introduced under the Biden Administration. Car buyers in the U.S. can save up to $7,500 on new vehicles by applying those credits, which can potentially lead to significant savings on Teslas. The federal tax credits, when combined with Tesla’s own reductions, means a U.S. car buyer could potentially save up to 31% on a Model Y.
The price cuts were a long time coming for Tesla which for years has promised but failed to deliver an affordable, entry level Tesla. CEO Elon Musk commented on his own apparent frustrations with the company’s pricing models during a Q2 earning conference call where he described them as, “frankly at embarrassing levels.” Growing pressures from both within and outside the company, however, appear to be accelerating Tesla price drops.
Despite years of rapid growth, Tesla has had to grapple with growing EV competition both from competing startups and legacy carmakers alike. Investor doubt over Tesla’s continued dominance led it towards its worst stock performance to date in 2022. Meanwhile, Tesla is also suffering from a barrage of self-inflicted wounds from its now part time CEO at exactly the wrong time. The cause: Twitter.
Musk’s brash, often incoherent and at times contradictory policy decisions at his new company have strained users’ trust and bled over to Tesla. As CNN notes, Tesla shares have lost around 66% of their value since the billionaire first expressed interest in his new pet project earlier this year. Tesla shares have declined by 45% since Musk officially closed the Twitter deal in October. While it’s unfair to blame all of Tesla’s declines primarily on Musk’s $44 billion side hustle, it’s clear the distraction aren’t helping.